Dornbirn, Austria – Following a sound start to the new 2014/15 financial year, in the second quarter Zumtobel Group AG was able to maintain the positive development of both revenues and earnings. Total revenues increased 4.7% in the first six months of the current financial year (May to October) to EUR 663.2 million (prior year: EUR 633.4 million). Operating earnings adjusted for special effects (adjusted EBIT) rose 11.8% over the comparable prior-year period to EUR 47.2 million (prior year: EUR 42.2 million). This represents a return on sales (adjusted EBIT margin) of 7.1% (prior year: 6.7%).
“We have made good progress in the first half of 2014/15. The strategic restructuring of the company is proceeding as planned and is being driven forward with great commitment at all levels. We are pleased to report that the first-half figures already reflect initial positive effects of these efforts – on the revenues side we are leveraging the growth potential generated by multi-brand luminaire sales activities, and on the earnings side we are benefitting from improved cost structures as a result of our restructuring measures,” said Zumtobel Group CEO Ulrich Schumacher summing up the first six months.
LED share of revenues reaches 45.1%
In both the Lighting and Components Segments, the Zumtobel Group is well positioned to gain above-average benefits from the technology change to LED. Innovative LED products are already responsible for major shares of the core business of Zumtobel Group AG. First-half revenues from the sale of LED products again showed a strong 56.1% rise compared to the prior-year period, reaching EUR 298.9 million (prior year: EUR 191.5 million). The LED share of Group revenues increased accordingly from 30.2% to 45.1%.
Positive development in Lighting and Components Segments
The Lighting Segment (Zumtobel / Thorn) benefited in the first six months from the stabilisation of the European construction industry as well as from the new mulit-brand sales structures. The portfolio of both brands is now being used in numerous lighting projects, enabling the Zumtobel Group to improve both customer satisfaction and its market presence. Segment revenues rose 5.1% to EUR 500.9 million (prior year: EUR 476.7 million).
The Components Segment continues to make very good progress in systematically aligning its business with LED technology. First-half revenues from LED components rose 86.9% to EUR 97.8 million (prior year: EUR 52.3 million) and were thus able to almost fully offset the declining demand for electronic ballasts as well as the drop in revenues due to the exit from magnetic technology and the sale of the connecting clamp business. Overall, segment revenues for the reporting period fell by just 0.8% to EUR 196.4 million (prior year: EUR 197.9 million) and actually exceeded expectations.
Revenues by region: Northern Europe is the main growth driver
Business development in the various regions differed strongly. In the D/A/CH region, which accounts for the largest share of Zumtobel Group sales, revenues for the reporting period rose 3.0% to EUR 190.8 million. The Northern Europe region reported 11.7% growth as revenues reached EUR 144.9 million. The main growth driver here was the UK, although the Scandinavian countries also posted significant growth in the second quarter in particular. After a slow start in the first quarter, the Benelux & Eastern Europe region showed very positive development and was able to post a 12.5% increase in first-half revenues, which reached EUR 60.7 million. In the Southern Europe & Latin America region business development remained well below expectations, showing a downturn of 6.8%. First-half revenues in the Asia & Pacific region remained unchanged at EUR 77.1 million. Revenues in the Middle East & Africa region continued the positive development of previous quarters, rising 11.3% to EUR 70.6 million. After a very weak first-half performance in 2013/14, the North America region recorded revenue growth of 16.2% in the first six months of the current financial year.
Restructuring proceeding as planned; marked increase in net profit for the period
In the course of the strategic restructuring of the Zumtobel Group, a number of measures have been introduced and these were progressively implemented as planned in the reporting period. The related measures in the Lighting Segment involve the merging of the previously separate sales organisations and the adjustment of production capacities. The restructuring measures in the Components Segment are related to the technology change to LED and an increased focus on the core business. The special effects related to restructuring amounted to EUR 11.6 million in the first six months (prior year: EUR 13.0 million) with a negative impact on earnings. However, as a result of increased revenues, initial positive effects of the restructuring measures and a marked improvement in financial income, first-half earnings were nevertheless up 57.2% at EUR 28.9 million (prior year: EUR 18.4 million).
Workforce totals 7,211 full-time equivalents
Compared to the balance-sheet date (30 April) in the first six months the size of the workforce fell 1.1% to 7,211 full-time equivalents including contract workers but excluding apprentices (30 April 2014: 7,291). At the Group level, structural reductions at the plants and in the sales sector were offset by an increase in the production area, driven by rising output volumes. The number of employees in Austria was reduced by 4.7% year-on-year. This decline resulted from the sale of Tridonic connection technology in Innsbruck and the exit from magnetic technology with the related shutdown of production in Fürstenfeld. The number of employees in Vorarlberg increased in comparison with the previous year: the workforce in Vorarlberg totalled 1,956.8 as of 31 October 2014 (full-time equivalents, including contract workers and excluding apprentices), which represents an increase of 90.2 FTE (plus 4.8%) over the level on 31 October 2013.
Management Board confirms outlook for 2014/15 financial year
Given the continuing stable development of the industry and the anticipated additional cost savings from the measures implemented to date, the Management Board confirms the previously communicated guidance for the 2014/15 financial year. This calls for an increase of roughly 3% in revenues and an improvement in the adjusted EBIT margin to 5-6% (adjusted EBIT margin for 2013/14: 3.8%). The restructuring measures are currently expected to result in negative special effects of approx. EUR 20 million during 2014/15. The first-half results show that Zumtobel Group AG is also on course to achieve its medium-term goal of gradually increasing the adjusted EBIT margin to 8-10% by 2016/17.
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